Many analysts agree that the position of the European currency paired with the American will always remain secondary. Last year, the "European" currency made several attempts to get around the dollar, but this was rarely possible. The dollar regained its position again, and the euro had to be contented with the second line in the rating of world currencies.
Moreover, the EUR / USD pair added 200 points shortly before the New Year, reaching 1.1231. In the future, a sharp jump gave way to a price pullback, which is not surprising for the pre-holiday market.
At the same time, significant support for the European currency was provided by strong data on business activity in the eurozone manufacturing sector for December 2019. The pan-European index reached 46.3 points, which slightly exceeds the figure for November 2019. However, the current values of business activity in the eurozone are not so high as to help the euro strengthen. In this regard, one should not expect the rise of the "European", experts summarize.
At the beginning of the new year, the American currency turned out to be vulnerable to negative factors despite a slight subsidence of the competitor in the pair. The dollar index fell slightly, demonstrating weak demand for dollars. Therefore, some support for the dollar was provided by a statement by US President Donald Trump on the signing of the first phase of the trade agreement on January 15, 2020. However, in general, traders did not show interest in the "American" currency.
On Friday, January 3, the publication of the minutes of the last Fed meeting is expected. According to experts, this can put additional pressure on the dollar due to the fact that the previous December meeting of the Federal Reserve left a negative impression. Earlier, the regulator announced a significant decrease in consumption growth and a noticeable decline in investment. They still remain weak, the agency stressed. At the same time, the Fed took an indefinitely long pause in the process of easing monetary policy, which greatly disappointed the dollar bulls. The Federal Reserve is also concerned about the weak dynamics of inflationary growth.
Thus, analysts are sure that the current situation may negatively affect the dynamics of the EUR / USD pair. At the moment, experts consider the price ceiling for the pair – 1.1240, which is the level of resistance. The EUR / USD pair does not reach it in any way, demonstrating a clear downward trend. On Thursday, January 2, the pair was trading within 1.1192 – 1.1193, trying to rise higher.
But unfortunately, attempts to raise the EUR / USD pair were unsuccessful. On the morning of Friday, January 3, the pair held at 1.1170, but then lost ground. The rollback was growing, and the EUR / USD pair went down.
Currently, the pair runs near 1.1152-1.1153, trying to rise higher from time to time. Sometimes these efforts are not in vain, but in general, the EUR / USD pair rarely succeeds. However, both the euro and the dollar do not stop trying to enter an upward trend.
Summing up the past year, experts note that the European currency was able to become a full-fledged competitor to the "American" one. Experts explain this by several reasons, including the existence of different economies in the eurozone, both strong and weaker, as well as the presence of negative interest rates, and because of which, investors prefer to invest in the dollar. In 2019, the "European" currency has fallen in price in relation to the dollar by 3%, and in 2020, the single currency may collapse by another 5%, analysts say.
Nevertheless, experts give the euro a chance for further "carte blanche" paired with the "American". According to analysts, the merit of the European currency for its entire existence, which is 21 years, is to undermine the unconditional dominance of the dollar. According to SWIFT calculations, the share of the euro in global trade is 35% and the dollar is 40%. This gap is quite small, experts emphasize. They believe that the European currency took place as a global phenomenon. However, it remains on the sidelines in relation to the American currency.
The material has been provided by InstaForex Company - www.instaforex.com